SHAPPIRIO v. GOLDBERG, 192 U.S. 232 (1904)

This was an action begun in the supreme court of the District of Columbia by Mary Shappirio and Jacob Shappirio, her husband, against Minnie D. Goldberg and George Goldberg, her husband, having for its object equitable relief because of alleged fraud of the respondents in the sale of certain property in Washington, District of Columbia, to the complainant, Mary Shappirio.

It appears that the sale was made through one Richold, a broker in real estate. George Goldberg was the owner of the property, and by memorandum made on May 11, 1900, authorized Richold to sell the property known as lots Nos. 1245 and 1247, being part of lot 28, square 977, fronting 34 feet on 11th street S. E., by 80 feet deep to an alley. Richold sold the property to Jacob Shappirio, for whom he was seeking an investment, for the price of $6,000. The terms were cash, $100 having been paid down at the making of the sale. This
[192 U.S. 232, 233]
property, having two buildings upon it, and being part of lot 28, is described as follows:

'Beginning for the same at the southeast corner of said lot and running thence north on Eleventh street thirty-four (34) feet; thence west eighty (80) feet eight (8) inches to an alley; thence south on said alley fourteen (14) feet; thence east eighteen (18) feet; thence south twenty ( 20) feet, and thence east sixty-two (62) feet eight (8) inches to the place of beginning.'

In the rear of the premises there was a strip 20 by 30 feet, having upon it a shed or stable, which, before the sale, was in the possession of Goldberg under an arrangement for its use, and was used by him in connection with the premises. This piece was not fenced off at the time of sale, and might well be taken to be a part of the premises by any person examining the same without accurate knowledge of the extent of the property actually owned by Goldberg. The annexed plat shows the part of lot 28 covered by the description in the deed, and the part of lot 2 in dispute:

Although the purchase was made by Jacob Shappirio, the deed was made to Mary Shappirio, June 5, 1900. On September 28, 1900, a conveyance by the owner of the title to lot 2 was made of the part of that lot in the rear of the premises to Minnie D. Goldberg, wife of George Goldberg, for the consideration of $300. Mary Shappirio and Jacob Shappirio on
[192 U.S. 232, 234]
June 5, 1900, executed a deed of trust upon the property conveyed to her, in the sum of $4,500. In the trust deed the property was accurately described.

After the property had been conveyed to Mary Shappirio it was rented to Goldberg, the vendor, who continued to occupy the same for eleven months. Upon asking a reduction of the rent, which was refused, Goldberg left the premises. On May 18, 1901, the present bill was filed, in which it was charged that Goldberg, in order to induce the sale in question, falsely represented that the property in the rear of lot 28 belonged to him, and would be included in the property sold, and notwithstanding the appearance of the property and the representations of Goldberg, the part conveyed did not include the part of lot 2 in the rear of lot 28; that George Goldberg afterwards purchased the property, part of lot 2, and caused the same to be conveyed to Minnie D. Goldberg, his wife, as a part of a scheme to defraud the plaintiff; that the wife was a party to the fraud, and had no interest in the property except to hold it for her husband.

The bill prays that this parcel of ground, part of lot 2, be decreed to be held by Minnie D. Goldberg for the use of the plaintiff, Mary Shappirio, and be conveyed to her. If this relief cannot be granted, the prayer is that the sale be rescinded, and Goldberg be required to pay back the amount of the purchase money, with costs and charges, and, upon default of payment, the property be sold.

A general denial of the allegations of fraud and deceit is made in the answer, together with the averment that the plaintiffs relied upon their own investigation, and if they were deceived as to the extent of the property, it was the result of the want of due care upon their part.

In the supreme court the bill of the complainant was dismissed, which decree was affirmed in the court of appeals.

The first question raised for our consideration involves the
[192 U.S. 232, 240]
jurisdiction of this court on appeal, it being claimed that the matter in dispute, exclusive of costs, does not exceed the sum of $5,000. By the act of February 9, 1893 (chap. 74, 27 Stat. at L. 434, U. S. Comp. Stat. 1901, p. 573), jurisdiction to review the final judgments of the court of appeals of the District of Columbia is given where the matter in dispute exceeds the sum of $5,000, exclusive of costs. In determining this question we may look to the allegations and prayer of the bill to ascertain the relief sought and the real extent of the controversy between the parties. The bill contains a prayer for the conveyance of the small strip of ground, which was purchased for $300, and if that were the only subject-matter of the suit, the amount required to give this court the right of review would not be in controversy. But if this relief is denied, the complainant seeks, in the alternative, to have the contract rescinded and the payment of the sum of $6,000, the purchase money, with costs and interest, decreed against the respondent. Upon the pleadings we are of opinion that this sum is also in dispute between the parties, and therefore this court has jurisdiction. To ascertain the right of jurisdiction in such a case we look not to a single feature of the case, but to the entire controversy between the parties. Stinson v. Dousman, 20 How. 461, 15 L. ed. 966.

In this case the issues are mainly those of fact, and, in the absence of clear showing of error, the findings of the two lower courts will be accepted as correct. Stuart v. Hayden,
169 U.S. 1
, 42 L. ed. 639, 18 Sup. Ct. Rep. 274; Dravo v. Fabel,
132 U.S. 487
, 33 L. ed. 421, 10 Sup. Ct. Rep. 170. An examination of the record in the light of these findings does not enable us to reach the conclusion that error has been committed, to the prejudice of the appellants.

As to what was said by Goldberg at the time of the purchase of the property, in conversation with Richold, the broker, and at the time the premises were visited by Shappirio with a view to purchase, there is much conflict of testimony. The use of the premises as a connected whole might well lead the purchaser to believe, in the absence of accurate knowledge, that it was all under the ownership of one person, and would be
[192 U.S. 232, 241]
included in the sale of the property to him; and, as said by the court of appeals, we believe that Shappirio may have been ignorant of the true condition of the title. But it was also found by that court that a correct description of the property was given in the deed and recorded chain of title. Richold, who made the sale, was intrusted by Shappirio with the examination of the deed and title, and thirty days were given to complete the purchase. For this purpose Richold was the agent of Shappirio, and it not appearing in the proof that he was misled by the representations of Goldberg, or that by any scheme or plan he was kept from a full examination of the title and the description of the property contained in the deed furnished, he must be held chargeable with knowledge which the opportunity before him afforded to investigate the extent and nature of the property conveyed and which he undertook to examine for the purchaser. It is true that Richold testifies that he was misled by the silence of Goldberg, and by the situation and use of the property, and stoutly denies that he had the knowledge which a reading of the accurate description of the deed would give. But he undertook to investigate the matter and report upon the title. A casual reading of the description in the deed or examination of the recorded plat would have shown that the premises were not of a uniform depth of 80 feet, and had the Lshape extension in the rear of the lot, which excludes any part of lot 2 from the premises conveyed. For the purpose of this examination Richold was the agent of Shappirio, and his knowledge and means of information must be imputed to the purchaser. There are cases where misrepresentations are made which deceive the purchaser, in which it is no defense to say that had the plaintiff declined to believe the representations, and investigated for himself, he would not have been deceived. Mead v. Bunn, 32 N. Y. 275. But such cases are to be distinguished from the one under consideration. When the means of knowledge are open and at hand, or furnished to the purchaser or his agent, and no effort is made to prevent the party from using them, and especially where the
[192 U.S. 232, 242]
purchaser undertakes examination for himself, he will not be heard to say that he has been deceived to his injury to the misrepresentations of the vendor. Slaughter v. Gerson, 13 Wall. 379, 20 L. ed. 627; Southern Development Co. v. Silva,
125 U.S. 247
, 31 L. ed. 678, 8 Sup. Ct. Rep. 881; Farrar v. Churchill,
135 U.S. 609
, 34 L. ed. 246, 10 Sup. Ct. Rep. 771; Farnsworth v. Duffner,
142 U.S. 43
, 35 L. ed. 931, 12 Sup. Ct. Rep. 164.

If this action is viewed as one to rescind a contract, in the light of the testimony and the findings of the courts below, the appellant stands upon no better ground.

It is well settled by repeated decisions of this court that where a party desires to rescind upon the ground of misrepresentation or fraud, he must, upon the discovery of the fraud, announce his purpose and adhere to it. If he continues to treat the property as his own the right of rescission is gone, and the party will be held bound by the contract. Grymes v. Sanders,
93 U.S. 55
, 23 L. ed. 798; McLean v. Clapp,
141 U.S. 429
, 35 L. ed. 804, 12 Sup. Ct. Rep. 29. In other words, when a party discovers that he has been deceived in a transaction of this character he may resort to an action at law to recover damages, or he may have the transaction set aside in which he has been wronged by the rescission of the contract. If he choose the latter remedy, he must act promptly, 'announce his purpose and adhere to it,' and not by acts of ownership continue to assert right and title over the property as though it belonged to him. In the present case, some months before the beginning of this action, probably in October, 1900, Shappirio learned that the conveyance did not include the premises, part of lot 2, in the rear of lot 28. It may be that the mere lapse of time in this case would not of itself have defeated the right to rescind, as a purchaser has a reasonable time in which to make election of such remedy after discovery of the fraud ( Neblett v. Macfarland,
92 U.S. 101
-105, 23 L. ed. 471, 472), but he cannot, after such discovery, treat the property as his own and exercise acts of ownership over it which show an election to regard the same as still his, and at the same time preserve his right to rescission. In the present case, after discovering that the part of lot 2 had not been conveyed by the
[192 U.S. 232, 243]
deed, Shappirio collected rents for some months upon the property, corresponded with Goldberg as to future terms of rental, declined to reduce the rent, made some repairs upon the property, and performed other acts of ownership. This conduct is wholly inconsistent with an election to undo the transaction and stand upon his right to rescind the contract.

We find no error in the judgment of the Court of Appeals affirming the decree of the Supreme Court, and it is affirmed.